Spitzer’s Expanding Real-Estate Empire

This week, Eliot L. Spitzer, the former New York governor, invited journalists to view his recent tax returns in his office in the French chateau-influenced Crown Building, on Fifth Avenue, which is doubling as his campaign headquarters. On the twenty-second floor, a gold-plated placard on the office door still bears the name of Spitzer’s father, Bernard. The lobby of the office features scale models of apartment buildings owned by the Spitzer family. But the details in Spitzer’s tax filings reveal that the senior Spitzer has quietly passed along much of his real-estate empire to his son, far more than previously has been revealed.

Bernard Spitzer, the son of Austrian immigrants, built a real-estate empire from scratch, after getting an engineering degree from City College of New York and working as a contractor. By the time the younger Spitzer graduated from Princeton and Harvard Law and became a prosecutor under Manhattan District Attorney Robert M. Morgenthau, Bernard was one of the city’s most prominent real-estate magnates. The eighty-nine-year-old has been ill with Parkinson’s disease in recent years, however.

Eliot Spitzer kept his distance from the family business while pursuing his political career. But since resigning as New York’s governor, in 2008—after Ashley Dupré, the black socks, and all that—Spitzer has effectively taken the reins of his sick father’s vast empire.

According to tax returns, his income as a landlord on the affluent East Side of Manhattan grew by more than eighty per cent from 2006 to 2012, from about $1.4 million to $2.56 million. The buildings, staffed by doormen in white gloves, are in prime locations, with many overlooking Central Park. Some have as few as two spacious apartments to each floor.

“Clearly he has taken on a larger role over the past few years,” said Robert Knakal, the chairman of Massey Knakal Realty Services, which has worked with the Spitzer family on several real-estate deals. “He’s very actively looking for new opportunities.”

Spitzer himself has lived in many of the buildings where he is now a landlord. His father built others. They include a Lenox Hill rental property on East Seventy-second Street, which also houses Marymount Manhattan College and boasts one-bedroom apartments starting at thirty-one hundred dollars per month (Eliot lived there in the mid-nineteen-eighties); a twenty-five-story apartment building on Fifth Avenue across from Central Park, which has two-bedrooms going for nearly twelve thousand dollars a month (Eliot lived there for years before separating from his wife); and 210 Central Park South, which the elder Spitzer built in the mid-nineteen-sixties.

Even the Crown Building, where Spitzer’s office is located, has a notable family tie: it was once secretly owned by deposed Philippine President Ferdinand E. Marcos, before Bernard Spitzer and a group of investors acquired it in a bankruptcy sale in the nineties. “That deal was legendary,” said Peter Hauspurg, a New York developer and chairman of Eastern Consolidated Properties.

Hauspurg, a real-estate developer for three decades, said he met with Spitzer earlier this year to discuss business ideas. Hauspurg found that the seasoned real-estate scion was looking for “high-profile, class-A-type assets” in Manhattan. Later, Spitzer announced a run for comptroller, the city’s chief fiscal officer and auditor. Since then, the candidate’s finances have attracted renewed attention. He is forgoing matching public financing, instead using his personal wealth to self-fund his campaign against Scott M. Stringer, the Manhattan borough president.

He invited journalists, including myself, to view his tax returns from 2012 and 2011 in a bid to address criticism from his opponent that he wasn’t being fully transparent with his finances. (I separately reviewed details from the 2006 tax return that he released publicly while he was governor.) As journalists pored over the tax returns in a spare office, a campaign aide was assigned to stand guard and make sure nothing went missing. Reporters who viewed the tax documents were not allowed to take photos or make copies of the returns. Strikingly, Spitzer’s campaign requested that certain financial details, regarding the candidate’s rental income from individual properties, not be published; the campaign declined to comment on the reason for the secrecy. (I agreed to comply with this request.)

“We are glad that media outlets are taking Eliot up on his offer to report on his full tax returns,” said Spitzer’s spokeswoman, Lis Smith, in a statement. (Campaign staffers were quick to note that Spitzer, who has made a career describing himself as the “Sheriff of Wall Street,” in reference to his aggressive policing of New York’s banking industry, paid forty-nine per cent of his income last year in federal, state, and city taxes, and nearly forty per cent in taxes in 2011.)

Onto the details: the joint tax return for Spitzer and his wife, Silda Wall Spitzer, shows that most of the couple’s income comes from real-estate properties in Manhattan; Spitzer owns small portions of a handful of buildings with his father, brother, and sister. The Spitzers reported nearly $4.3 million in income last year, and more than $3.7 million in 2011.

Source: Eliot Spitzer’s 2012 and 2011 tax returns.

Real estate represents more than sixty per cent of the couple’s income; the rest comes from the short-lived talk show on CNN that made Spitzer $1.15 million, his hundred-and-eighty-thousand-dollar annual salary from the family business, and Silda Wall Spitzer’s hundred-and-twenty-five-thousand-dollar-a-year job at a private-equity firm, among other gigs.

The bulk of Spitzer’s real-estate income comes from just one property, which houses several high-end Madison Avenue storefronts and is owned through the holding company Spitzer-Madison L.L.C., a fact that hasn’t previously been reported. The building has, at various times, been to home to the luxury jeweler Georg Jensen and the clothier Brunello Cucinelli. A copy of Spitzer’s financial-disclosure report filed with New York City’s Conflicts of Interest Board for the comptroller race shows that he owns sixty-three per cent of the building. The report also shows that Spitzer acquired partial shares in four other buildings in 2010.

The former governor, who is separated from his wife, now lives at another family-owned property on Fifth Avenue, about twenty blocks from his old apartment. His campaign says he pays a “fair market rent” at his new home.

Derek Kravitz, a New York–based writer, is a fellow at Columbia University’s Stabile Center for Investigative Journalism. He has written for the Wall Street Journal, the Associated Press, and the Washington Post, among other publications.

The league, we’ve been told for the past year, is desperate to stay out of politics. But it’s clear that some constituents are judged to be more important, more valuable, than others.

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